§ 194. Treatment of reforestation expenditures

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1980

   Pub. L. 96–451 title III § 301(a) · 94 Stat. 1983

   Enacted · 26 U.S.C. § 194

   Added Pub. L. 96–451, title III, § 301(a), Oct. 14, 1980, 94 Stat. 1989

   Source evidence

   Code source credit
   Added Pub. L. 96–451, title III, § 301(a), Oct. 14, 1980, 94 Stat. 1989

   Enacted provision · exact public law section
   (a) In General.— Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1954 (relating to itemized deductions for individuals and corporations) is amended by adding at the end thereof the following new section: “SEC. 194. AMORTIZATION OF REFORESTATION EXPENDITURES. “(a) Allowance of Deduction.— In the case of any qualified timber property with respect to which the taxpayer has made (in accordance with regulations prescribed by the Secretary) an election under this subsection, the taxpayer shall be entitled to a deduction with respect to the amortization of the amortizable basis of qualified timber property based on a period of 84 months. Such amortization deduction shall be an amount, with respect to each month of such period within the taxable year, equal to the amortizable basis at the end of such month divided by the number of months (including the month for which the deduction is computed) remaining in the period. Such amortizable basis at the end of the month shall be computed without regard to the amortization deduction for such month. The 84-month period shall begin on the first day of the first month of the second half of the taxable year in which the amortizable basis is acquired. “(b) Limitations.— “(1) Maximum dollar amount.— The aggregate amount of amortizable basis acquired during the taxable year which may be taken into account under subsection (a) for such taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 143)). 26 USC 143. “(2) Allocation of dollar limit.— “(A) Controlled group.— For purposes of applying the dollar limitation under paragraph (1)— “(i) all component members of a controlled group shall be treated as one taxpayer, and “(ii) the Secretary shall, under regulations prescribed by him, apportion such dollar limitation among the component members of such controlled group. For purposes of the preceding sentence, the term ‘controlled group’ has the meaning assigned to it by section 1563(a), 26 USC 1563. except that the phrase ‘more than 50 percent’ shall be substituted for the phrase ‘at least 80 percent’ each place it appears in section 1563(a)(1). “(B) Partnerships.— In the case of a partnership, the dollar limitation contained in paragraph (1) shall apply with respect to the partnership and with respect to each partner. “(3) Section not to apply to trusts.— This section shall not apply to trusts. “(4) Estates.— The benefit of the deduction for amortization provided by this section shall be allowed to estates in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiary and the fiduciary under regulations prescribed by the Secretary. Any amount so apportioned to a beneficiary shall be taken into account for purposes of determining the amount allowable as a deduction under this section to such beneficiary. “(c) Definitions and Special Rule.— For purposes of this section— “(1) Qualified timber property.— The term ‘qualified timber property’ means a woodlot or other site located in the United States which will contain trees in significant commercial quantities and which is held by the taxpayer for the planting, cultivating, caring for, and cutting of trees for sale or use in the commercial production of timber products. “(2) Amortizable basis.— The term ‘amortizable basis’ means that portion of the basis of the qualified timber property attributable to reforestation expenditures. “(3) Reforestation expenditures.— “(A) In general.— The term ‘reforestation expenditures’ means direct costs incurred in connection with forestation or reforestation by planting or artificial or natural seeding, including costs— “(i) for the preparation of the site; “(ii) of seeds or seedlings; and “(iii) for labor and tools, including depreciation of equipment such as tractors, trucks, tree planters, and similar machines used in planting or seeding. “(B) Cost-sharing programs.— Reforestation expenditures shall not include any expenditures for which the taxpayer has been reimbursed under any governmental reforestation cost-sharing program unless the amounts reimbursed have been included in the gross income of the taxpayer. “(4) Basis allocation.— If the amount of the amortizable basis acquired during the taxable year of all qualified timber property with respect to which the taxpayer has made an election under subsection (a) exceeds the amount of the limitation under subsection (b)(1), the taxpayer shall allocate that portion of such amortizable basis with respect to which a deduction is allowable under subsection (a) to each such qualified timber property in such manner as the Secretary may by regulations prescribe. “(d) Life Tenant and Remainderman.— In the case of property held by one person for life with remainder to another person, the deduction under this section shall be computed as if the life tenant were the absolute owner of the property and shall be allowed to the life tenant.”.

2. 1982

   Subchapter S Revision Act of 1982

   Pub. L. 97–354 § 3(g) · 96 Stat. 1669

   1. Substituted · 26 U.S.C. § 194(b)(2)(B)

      Pub. L. 97–354 substituted “Partnerships and S corporations” for “Partnerships” in heading

   2. Inserted · 26 U.S.C. § 194(b)(2)(B)

      Pub. L. 97–354 inserted “A similar rule shall apply in the case of an S corporation and its shareholders.”

   Source evidence

   Code amendment note
   Subsec. (b)(2)(B). Pub. L. 97–354 substituted “Partnerships and S corporations” for “Partnerships” in heading, and inserted “A similar rule shall apply in the case of an S corporation and its shareholders.”

   Enacted provision · exact public law section
   (g) Amortization of Reforestation Expenditures (Section 194).— Subparagraph (B) of section 194(b)(2) (relating to partnerships) 26 USC 194. is amended— (1) by adding at the end thereof the following new sentence: “A similar rule shall apply in the case of an S corporation and its shareholders.”, and (2) by striking out “Partnerships” in the subparagraph heading and inserting in lieu thereof “Partnerships and s corporations”.

3. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 title XIII § 1301(j)(8) · 100 Stat. 2085

   Substituted · 26 U.S.C. § 194(b)(1)

   Pub. L. 99–514 substituted “section 7703” for “section 143”

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 99–514 substituted “section 7703” for “section 143”.

   Enacted provision · exact public law section
   (8) Sections 22(e)(2), 32(c) and (d), 86(c)(3), 152(a)(9), 153(5), 194(b)(1), 1398(d)(2), 3402(f), and 6362(f)(5) are each amended by striking out “section 143” each place it appears and inserting in lieu thereof “section 7703”.

4. 2004

   Pub. L. 108–357 § 322(c)(4) · 118 Stat. 1418

   Substituted · 26 U.S.C. § 194

   Pub. L. 108–357, § 322(c)(4), substituted “Treatment” for “Amortization” in section catchline

   Source evidence

   Code amendment note
   Pub. L. 108–357, § 322(c)(4), substituted “Treatment” for “Amortization” in section catchline.

   Enacted provision · exact public law section
   (4) The heading for section 194 is amended by striking “amortization” and inserting “treatment”.

   Effective date note
   Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

5. 2004

   Pub. L. 108–357 § 322(a) · 118 Stat. 1418

   Substituted · 26 U.S.C. § 194(b)

   Pub. L. 108–357, § 322(a), substituted “Treatment as expenses” for “Limitations” in heading

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 108–357, § 322(a), substituted “Treatment as expenses” for “Limitations” in heading.

   Enacted provision · exact public law section
   (a) In General.— So much of subsection (b) of section 194 (relating to amortization of reforestation expenditures) as precedes paragraph (2) is amended to read as follows: “(b) Treatment as Expenses.— “(1) Election to treat certain reforestation expenditures as expenses.— “(A) In general.— In the case of any qualified timber property with respect to which the taxpayer has made (in accordance with regulations prescribed by the Secretary) an election under this subsection, the taxpayer shall treat reforestation expenditures which are paid or incurred during the taxable year with respect to such property as an expense which is not chargeable to capital account. The reforestation expenditures so treated shall be allowed as a deduction. “(B) Dollar limitation.— The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 7703)).” .

   Effective date note
   Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

6. 2004

   Pub. L. 108–357 § 322(a) · 118 Stat. 1418

   Amended · 26 U.S.C. § 194(b)(1)

   Pub. L. 108–357, § 322(a), amended heading and text of par. (1) generally. Prior to amendment, text read as follows: “The aggregate amount of amortizable basis acquired during the taxable year which may be taken into account under subsection (a) for such taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 7703)).”

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 108–357, § 322(a), amended heading and text of par. (1) generally. Prior to amendment, text read as follows: “The aggregate amount of amortizable basis acquired during the taxable year which may be taken into account under subsection (a) for such taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 7703)).”

   Enacted provision · exact public law section
   (a) In General.— So much of subsection (b) of section 194 (relating to amortization of reforestation expenditures) as precedes paragraph (2) is amended to read as follows: “(b) Treatment as Expenses.— “(1) Election to treat certain reforestation expenditures as expenses.— “(A) In general.— In the case of any qualified timber property with respect to which the taxpayer has made (in accordance with regulations prescribed by the Secretary) an election under this subsection, the taxpayer shall treat reforestation expenditures which are paid or incurred during the taxable year with respect to such property as an expense which is not chargeable to capital account. The reforestation expenditures so treated shall be allowed as a deduction. “(B) Dollar limitation.— The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 7703)).” .

   Effective date note
   Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

7. 2004

   Pub. L. 108–357 § 322(c)(2) · 118 Stat. 1418

   Substituted · 26 U.S.C. § 194(b)(2)

   Pub. L. 108–357, § 322(c)(2), substituted “paragraph (1)(B)” for “paragraph (1)” in introductory provisions of subpar. (A) and in subpar. (B)

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 108–357, § 322(c)(2), substituted “paragraph (1)(B)” for “paragraph (1)” in introductory provisions of subpar. (A) and in subpar. (B).

   Enacted provision · exact public law section
   (2) Section 194(b)(2) is amended by striking “paragraph (1)” both places it appears and inserting “paragraph (1)(B)”.

   Effective date note
   Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

8. 2004

   Pub. L. 108–357 § 322(c)(1) · 118 Stat. 1418

   Struck · 26 U.S.C. § 194(b)(3); 26 U.S.C. § 194(b)(4)

   Pub. L. 108–357, § 322(c)(1), struck out pars. (3) and (4) which related to inapplicability of section to trusts and applicability of section to estates, respectively

   Source evidence

   Code amendment note
   Subsec. (b)(3), (4). Pub. L. 108–357, § 322(c)(1), struck out pars. (3) and (4) which related to inapplicability of section to trusts and applicability of section to estates, respectively.

   Enacted provision · exact public law section
   (1) Section 194(b) is amended by striking paragraphs (3) and (4).

   Effective date note
   Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

9. 2004

   Pub. L. 108–357 § 322(b) · 118 Stat. 1418

   Inserted · 26 U.S.C. § 194(c)(2)

   Pub. L. 108–357, § 322(b), inserted “which have not been taken into account under subsection (b)” after “expenditures”

   Source evidence

   Code amendment note
   Subsec. (c)(2). Pub. L. 108–357, § 322(b), inserted “which have not been taken into account under subsection (b)” after “expenditures”.

   Enacted provision · exact public law section
   (b) Net Amortizable Basis.— Section 194(c)(2) (defining amortizable basis) is amended by inserting “which have not been taken into account under subsection (b)” after “expenditures”.

   Effective date note
   Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

10. 2004

    Pub. L. 108–357 § 322(c)(3) · 118 Stat. 1418

    1. Added · 26 U.S.C. § 194(c)(4); 26 U.S.C. § 194(c)(5)

       Pub. L. 108–357, § 322(c)(3), added pars. (4) and (5)

    2. Struck · 26 U.S.C. § 194(c)(4); 26 U.S.C. § 194(c)(5)

       Pub. L. 108–357, § 322(c)(3), struck out former par. (4) which related to basis allocation if the amount of the amortizable basis acquired during the taxable year of all qualified timber property with respect to which the taxpayer had made an election under subsec. (a) exceeded the amount of the limitation under subsec. (b)(1)

    Source evidence

    Code amendment note
    Subsec. (c)(4), (5). Pub. L. 108–357, § 322(c)(3), added pars. (4) and (5) and struck out former par. (4) which related to basis allocation if the amount of the amortizable basis acquired during the taxable year of all qualified timber property with respect to which the taxpayer had made an election under subsec. (a) exceeded the amount of the limitation under subsec. (b)(1).

    Enacted provision · exact public law section
    (3) Section 194(c) is amended by striking paragraph (4) and inserting the following new paragraphs: “(4) Treatment of trusts and estates.— “(A) In general.— Except as provided in subparagraph (B), this section shall not apply to trusts and estates. “(B) Amortization deduction allowed to estates.— The benefit of the deduction for amortization provided by subsection (a) shall be allowed to estates in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiary and the fiduciary under regulations prescribed by the Secretary. Any amount so apportioned to a beneficiary shall be taken into account for purposes of determining the amount allowable as a deduction under subsection (a) to such beneficiary. “(5) Application with other deductions.— No deduction shall be allowed under any other provision of this chapter with respect to any expenditure with respect to which a deduction is allowed or allowable under this section to the taxpayer.” .

    Effective date note
    Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

11. 2005

    Tax Technical Corrections Act of 2005

    Pub. L. 109–135 § 403(i)(1)(A) · 119 Stat. 2577

    Amended · 26 U.S.C. § 194(b)(1)(B)

    Pub. L. 109–135, § 403(i)(1)(A), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 7703)).”

    Source evidence

    Code amendment note
    Subsec. (b)(1)(B). Pub. L. 109–135, § 403(i)(1)(A), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 7703)).”

    Enacted provision · exact public law section
    (A) Subparagraph (B) of section 194(b)(1) is amended to read as follows: “(B) Dollar limitation.— The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed— “(i) except as provided in clause (ii) or (iii), $10,000, “(ii) in the case of a separate return by a married individual (as defined in section 7703), $5,000, and “(iii) in the case of a trust, zero.” .

    Effective date note
    Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

12. 2005

    Tax Technical Corrections Act of 2005

    Pub. L. 109–135 § 403(i)(1)(B) · 119 Stat. 2577

    Amended · 26 U.S.C. § 194(c)(4)

    Pub. L. 109–135, § 403(i)(1)(B), reenacted heading without change and amended text generally. Prior to amendment, text read as follows:

    Source evidence

    Code amendment note
    Subsec. (c)(4). Pub. L. 109–135, § 403(i)(1)(B), reenacted heading without change and amended text generally. Prior to amendment, text read as follows:

    “(A) In general.—Except as provided in subparagraph (B), this section shall not apply to trusts and estates. “(B) Amortization deduction allowed to estates.—The benefit of the deduction for amortization provided by subsection (a) shall be allowed to estates in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiary and the fiduciary under regulations prescribed by the Secretary. Any amount so apportioned to a beneficiary shall be taken into account for purposes of determining the amount allowable as a deduction under subsection (a) to such beneficiary.”

    Enacted provision · exact public law section
    (B) Paragraph (4) of 26 USC 194. section 194(c) is amended to read as follows: “(4) Treatment of trusts and estates.— The aggregate amount of reforestation expenditures incurred by any trust or estate shall be apportioned between the income beneficiaries and the fiduciary under regulations prescribed by the Secretary. Any amount so apportioned to a beneficiary shall be taken into account as expenditures incurred by such beneficiary in applying this section to such beneficiary.” .

    Effective date note
    Amendments by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

14 of 14 references resolved to an enrolled provision